The manufacturing industry continues to face a myriad of problems, including multiple taxes, counterfeiting, lack of capital and high electricity costs.
It is disheartening that influx of illicit products into the country, for example, has become a huge impediment to manufacturing, creation of employment and economic growth. Despite stringent measures and enactment of a plethora of legal mechanisms, counterfeits and cheap imports continue to flood the local market, to the detriment of the local industry.
Many manufacturers have incurred heavy financial losses due to counterfeits. Unfortunately, combating illicit goods in the country has proved to be a herculean task for the authorities. Kenya Revenue Authority (KRA) data show local manufacturers lose $42 million yearly to counterfeiters and the government $80 million in potential tax revenue. No wonder, promotion of the industry and competitiveness in the country has remained a mirage.
Whereas agencies such as KRA, Kenya Bureau of Standards, Nacada, Anti-Counterfeit Authority (ACA) and ministries of Interior and Health have joined hands to beat counterfeits and contraband, the menace of illicit trade continues. An ACA survey shows that illicit trade cost Kenya Sh103 billion in revenue in 2018 and Sh101.23 billion in 2017.
Apparently, illicit trade in contraband and black market profiteering continues to deny the country the much-needed revenue during these hard economic times occasioned by the Covid-19 pandemic. According to Mr Pradeep Paunrana, the chairman of the ACA board, counterfeited medicines and cigarettes are among the prized products that pass through country into the regional markets with some spilling over to local consumers.
Killed sugar companies
Needless to mention, the illegal importation of cheap sugar has killed virtually all local sugar companies. Besides causing unemployment, the trade has impoverished innumerable farmers. According to the National Crime Research Centre (NCRC) 2020 report, 48 per cent of all cases of smuggling involve sugar, with 789 reported over the past year.
The distinction between a genuine and counterfeit product is subtle and often ignored, making Kenya a dumping ground for cheap fake goods. Sadly, counterfeit goods and products like medicine and foods are often unfit for human consumption.
To stop the illicit trade, there is a need for a strategy to deal with counterfeits and contraband. The entry of counterfeits and substandard goods into the country must end. Combating illicit trade requires agility and ruthlessness.
A sustainable manufacturing industry cannot be achieved in a market flooded with counterfeits and contraband. It is time the government ruthlessly dealt with this illicit trade in such products lest the Kenya Vision 2030 pillar on industrialisation ends up as a mirage.
Mr Muthama, business management and strategic management lecturer at JKUAT, is a consultant and author. [email protected].
